Few gains seen from west by opening govt supply contracts to foreign players

NEW DELHI: India may not make significant gains by taking on global commitments to open up government supply contracts to foreign players as a number of developed countries, especially in the EU, protect markets through procedural norms that foreign players cannot fulfill, according to initial findings of a government study.

The study, which is yet to be finalised, reveals that in certain years, government purchases made by the EU from non-EU sources was less than half a percent of total sourcing, an official told ET.

"The benefits that government procurement pacts could bring to the country in terms of increased business and improved transparency also have to be weighed against the costs of putting in place relevant systems and practices", the official said.

India is facing pressure from the developed world including the EU, Japan, Australia and the US to get into bilateral government procurement pacts and also become a signatory to the plurilateral GPA at the WTO which, at present, has 14 members including the EU and the US.

Although India allows foreign companies to bid for government orders, it has the freedom to impose curbs as and when it wants as it has not signed any agreements and taken on commitments on the same. It also is not obligated to switch over to alternate bidding and accounting systems as laid down in various agreements to ensure transparency.

"The commerce department wanted a comprehensive study on the costs and benefits of GPAs so that there are no illusions about the possible market access gains and other benefits and losses," the official said. The Centre for WTO Studies, which is a research centre on WTO issues under the commerce department, was assigned the task of carrying out a comprehensive study on the possible gains and losses from bilateral GPAs as well as the GPA under the WTO.

Although total global business from government purchases is estimated at over $1.5 trillion, more than six times India's total goods exports, very little is actually open for foreign players as the bidding process and other qualification procedures in most countries is non-transparent and favours domestic suppliers.

"The study highlights that in some years, government procurement in the EU from foreign countries was as low as 0.3%," another official said.